The Group of Companies Doctrine - Bone of Contention
By Amri Gupta, ICFAI Law School, IFHE, Hyderabad*.
The power conferred by Section 7 of the Arbitration & Conciliation Act 1996 ("the Act") is the primary element motivating parties to choose arbitration. Section 7 of the Act is based on the mutual consent of parties with a legal connection to refer to arbitration. Courts have construed Section 7 over time based on the interests of the parties, the circumstances, and the theories. The Group of Companies Doctrine ("the Doctrine") favours the concept of ‘single economic reality' over the doctrine of corporate personhood. It implies that the group entities have common transactions and intentions in arbitral proceedings, regardless of whether they are signatories to the Arbitration Agreement.
* The author is a fifth-year student pursuing B.A. LL.B.(Hons.) from ICFAI Law School, IFHE, Hyderabad.